to watch. >> i think we play with more heart, more of an edge to compete. >> we're all going to be watching. a final match update. right now, stay tuned to more cnn. "your money" starts right now. no one can say for certain what will happen if the debt situation is not raised. welcome to "your money," i'm ali velshi. they will no longer be able to pay all of our nation's bills and the nation will default on its debt. republicans are going to vote on their own plan this week, complete with spending cuts. but president obama says he won't support deep cuts without increases in taxes. >> if you are trying to get to 2.4 trillion without any revenue, then you are effectively gutting a whole bunch of domestic spending that

is going to be too burdensome and not something that i would support. >> david gergen is the cnn political analyst. there was a time when john boehner and president obama both talked of doing something big to change america's unsustainable economic path. what do you think? do that you think that opportunity is lost? >> well, a week is a long time in politics. it can be a lifetime, as you know. i think the big deal, the grand deal, the grand bargain of $4 trillion over four years is dead, it's gone. i think the chances of getting a deal at 2.5 are 2. the middle double deal, very unlikely, because the president does not want to go that high without tax increases and republicans are not going to do it. here's the question that is coming out. and that s. the house republicans are now pushing a very, very tough deal through the house. the -- over on the senate side,

the republicans are working to get a version of the mcconnell plan. and the president will accept that as he said in his news conference on friday. but whether the house republicans would accept that or not, it's a big, big question. it seems to me that's the lead horse. that's the lead solution, a version of the mcconnell plan, with throwing in the spending which i think would be a good idea which leaves $1.5 trillion of spending cuts. the republicans have been sending some signals and in which case -- >> that's exactly right. diane is a chief economist. diane, ben bernanke called it calamatist not to raise the debt ceiling. both have warned that they will downgrade the always u.s. stall lar aaa credit rating. let's tall about consequences from an economist perspective. if the u.s. fails to raise the debt ceiling on august 2nd, what does it mean for our already struggling economic recovery? >> well, it's incredibly bad

news. it could be enough to push us into a recession, depending on how far immediately they would have to do 40 to 45% cuts in spending just right off the top of the board. how long that would last? my plan would be that i would stop paying congress for not doing their job and i think the real issue is broad based. you can't escape these. i know the american public doesn't like the fearmongering going on around this issue and it's real. it's a very real issue. the thought that we would have to pay higher interest rates, the thought that we would allow the freedom of choice in this country to chose our future which we still have within our grasp and leave it to the rest of the world to determine our future with higher interest rates and changes in the spending cuts, they are forced upon us and thrust upon us, it's just unimaginable to me. but unfortunately it's getting to be more worry some as each day ticks on.

>> how might a u.s. default affect the government? tom foreman is here to break it down for us. >> breakdown is the right phrase. it is a shock wave that with go with the value of your house itself approximate the cost of borrowing money from the government gets higher, that would mean the cost of borrowing money would go higher. interest rates could rise. that could mean more money on mortgages, things like your car, the rates could rise there. gas prices could rise as a result of that. and, of course, your roads might be in poor quality if the government cannot afford to take care of them. what about the people that earn the money for the house. first of all, if he works for a small business, he would end up unemployed because they can't afford to operate that way anymore. he can lose money in his savings account and have a difficult time getting a loan if he's trying to run his own business

because money would tighten up all over. let's say mom works for the government. she could wind up furloughed and see credit card rates rise. let's look at the kids over here. here's a son. he wants to go to college. student loans could be harder to obtain because of the same reasons. interest rates. financial aid restrictions could be put into place. let's put the daughter in the military. her salary could be limited or delayed. she could possible get ious. and private contractors, really important here, the people who supply everything for the government, the military, and all of these people, they could be left hanging out on a limb because the money was not there. what about grandma? social security could be delayed. retirement benefits could be reduced. we don't know where this would hit. the simple truth is, it's not a concern for capitol hill.

it could be a concern for real homes across the country. >> all right. tom, there's a lot of would have, should have, a lot of theory there. the bottom line is, we don't know. you and i were together and so were you, diane. a lot of smart people thought that the market would take that in stride and they didn't. this is about lehman brothers collapsing. david, you have been in the white house. you know how people think. why are some people so concerned, particularly those concerned with scoring political points, why is it this lowering taxes overtaking the ideas that this could have broader and more devastating effects and not raise the credit limit? >> well, i think ultimately that republicans, at least i hope, will agree to go for the debt ceiling. certainly speaker mcconnell has -- i mean john boehner has. there is a strong sentiment among republicans that the cuts that are on the table now are

ich illusory. we had this announcement about budget cuts. when you broke it down, it didn't turn out to be much. it turned out to be peanuts. there is a strong feeling that what they are being asked to do is agree to cuts that are actually quite modest and then increase taxes and in effect pay for the welfare state and they would like to shrink the size of the welfare state. this is ultimately a conversation, a debate of food fight over how big the american government should be and that's why they are not doing it. but the question becomes, i cannot believe at the end of the day, how it would go into default. it would be so much beyond what we ever experience, knowing that we're on the edge of niagara

falls, i can't believe -- >> you would think so and you would hope so. diane, stay right there. let's talk to not an elected official, not a government employee, grover norquist is the president of the americans for tax reform. your lobbying group has got over 240 house republicans to sign a pledge never to support an increase in taxes. you're warning that they will pay a political price. are you one of the reasons that there is not a debt increase right now? >> the taxpayer pledge is a candidates for office and house and senate members sign to the voters of their state and to the nation. the pledge isn't to americans for tax reform. it isn't to me. the american taxpayers have asked an elected majority in the house of representatives and 41 members of the senate who ran committing not to raise taxes. >> right.

>> our friend, president obama, has said that he won't try and solve the problem he created with his spending unless people -- >> wait a minute. he created with his spending. you didn't suggest that our budget problem is because of president obama, did you, grover? >> well, let's see. on august 27nd -- now there's a new absolute date that he wasn't -- >> right. >> grover, let's start this conversation over. you know what that is. you know that we hit the debt limit on may 16th and you know that the treasury secretary said i can move that to august 2nd. >> right. >> let's have a real conversation. >> the new date, why are we hitting august 2nd? >> because. you know that as well a as i do. let's get back to the point. >> because obama spent -- we're at this -- >> are we in this debt situation because of the obama administration, grover? >> yes. >> okay. that's an unreasonable position. let me ask you this, what is wrong -- >> $800 billion on the stimulus? >> our debt problem is way

beyond $800 billion, grover. that's why we are electing people as we do to represent us in government and get to washington and say, this conversation is a whole lot more knew wants and complex than it was when i was running for office in iowa, arkansas, or in new york and i may have to compromise. why is the increasing taxes more important than the health of the economy that it is putting us into right now? >> because not raising taxes is important to the health of the economy because the president wants to spend the money, he wants to raise tacks and spend more money and the answer to that is no. the most important things is to turn the economy around. we've been losing jobs since obama starting spending more money, dramatically -- the bush spending was too high. obama spending is a trillion dollars more this year than when bush left office. one trillion all year. he's going to add another 10 trillion during his presidency. that's what we need to pull

back. he wants to raise taxes. the american people and the people they elected say, don't raise taxes. cut spending. that's the argument. obama wants to spend more and raise taxes and the republicans want to spend not as much as obama does and not raise taxes. why would you have them go to the american people and say, because obama wants to spend more money, you're going to have to pay for it? the answer to that is no. >> grover, i want to ask you whether there are any taxes in this country that you need to see increased. grover norquist is standing by. right back after the break.

right now, go to priceline for a sneak peek at recent winning and better than ever! hotel bids to find where you n save up to 60% on hotels. * we'll even email you other people's winning bids, so you'll know what price to name. *á with new hotel bid alerts, from priceline.

you could save a bundle with geico's multi-policy discount. geico, saving people money on more than just car iance. ♪ geic she is the greatest thing ever. one little smile, one little laugh. honey bunny. [ babbles ] [ laughs ] we would do anything for her. my name is kim bryant and my husband and i made a will on legalzoom. it was really easy to do. [ spits ] [ both laugh ] [ shapiro ] we created legal zoom to help you take care of the ones you love. go to legalzoom.com today and complete your will in minutes.

at legalzoom.com we put the law on your side. go to legalzoom.com today and complete your will in minutes. luck? i don't trade on luck. i trade on fundamentals. analysis. information. i trade on tradearchitect. this is web-based trading, re-visualized. streaming, real-time quotes. earnings analysis. probability analysis. that's what opportunity looks like. it's all visual. intuitive. and its available free, wherever the web is. this is how trade strategies are built. tradearchitect. only from td ameritrade. welcome to better. try new tradearchitect and trade commission free for 60 days. we're back with grover norquist. he's the president of american's for tax reform. grover, you got so many republicans in congress to sign a pledge to never raise taxes. a lot of people are wondering if it's appropriate that you hold so much power in the republican party. you've never been elected to pub lig office but you're certainly

influential. what's the consequence? if somebody who has signed one of those pledges of remarkable inflection built that you forced them to sign goes against you? >> well, people take the pledge because they speak to their voters. the pledge is not to me. the pledge is to the voters in oklahoma. if your name is tom co-burn, it's to the people of your state who elected you. >> they didn't ask the pledge. you provide the pledge. you write it, get everybody to sign it. it's your pledge. let's not mince words, grover. you want people to raise the taxes. >> we offer that pledge to all candidates for office. some choose to say to their constituents, vote for me. i won't raise taxes. >> okay. >> obama said i will raise taxes. different people take different approaches. that vote, that pledge is put to the voters of their state and then they get elected.

it's important that people can trust their elected officials not to lie their way into office. >> is it more important, grover, that people can make the right decisions in their interest than to be loyal to grover norquist so they get re-elected again? >> okay. are you not listening? >> i'm listening. i'm waiting for you to tell me why you think america is better. >> well, raising taxes does not make the economy stronger. it makes it weaker. spending money you don't have does not make us stronger t makes us less. we ought to spend less and not raise tacks. obama wants to spend more. >> i will give you this, grover. you were into this long before it was the majority opinion. but you've seen the polls that say most republicans, not most americans, most republicans agree with the fact that there need to be spending cuts and some corresponding tax increases. do you think that there's not a tax in america on the wealthy or on corporations that needs to be increased? there's just no tax anywhere thaw think needs to be increased?

>> well, the taxpayer protection plan, which any of your viewers can read on americans for tax reform website makes it very clear. tax reform, if there's a credit or deduction that is inappropriate, get rid of it. reduce rates so it's not a hidden tax increase. we're americans for tax reform. we passed in 1986. we want lower rates and a broader base. but not hidden tax increases. >> i'll say to viewers, by the way, the pledge reads this. i, the under signed, and all of the people that i will oppose and vote against, that is accurate, grover? >> pretty simple. >> all right. >> no net tax increase. >> and you continue -- okay. no net tax increase. you continue to counsel those that have signed this pledge not to negotiate at all with anything that will increase the debt limit if it involves increasing taxes? >> and take a look at what has happened across the country in the states this year, governors

who sign the pledge have won that fight. they are not raising taxes. they are reducing spending. the healthy states are not raising tacks. they have elected people that have taken the pledge. the unhealthy states like illinois and connecticut are raising taxes and damaging their economy. the pledge is safe. >> and the pledge when this debt ceiling is not increased will cost americans a lot of money when it's not increased #? >> i hope president obama will not stick to his left-wing guns and tax krinss. that he will come to the table and put something in writing which he hasn't done yet. there is no obama plan. >> wow. >> in writing. >> remarkable to hear you suggesting that president obama does not stick to his ideological guns when your entire existence is about sticking to your ideological guns. president of americans for tax reform, a name that doesn't

entirely represent what he's doing. david grover norquist is remarkably committed to what is he talking about, but there is a problem, that politicians in america cannot do something that risks their seat because their voters will not let them. and pledges like this cause problems in washington. >> let me put my cards on the table. and grover knows this. i have supported the simpson bowls plan all along. it's an overall effort to get this deficit under control. but in fairness, grover does have a point. and simpson bowles said it was twool to one in spending cuts versus tax increases. the more central than taxes is a question of how much we're now spending. we've taken the level of

spending in this country from about 20% of gdp at the federal level up to 24, 25% over the last two years. another year in sight for 25%. and whatever public interests are saying that you've got to sweat that down. and i believe the tax unfair to villainize the republicans when, in fact, there is a very real possibility that the senate will present a plan which will have a trillion to a trillion and a half dollars in cuts and no tax increases and that's what the president will ultimately accept and that may be well where we come out at the end of the day. >> the problem is more political. >> the default versus tax increases is mistaking the problem somewhat. >> yeah, i'm not sure why the two are in the same discussion. i would have preferred that they deal with the debt ceiling and with spending and taxing entirely separately but we are

not in that position. the reality is that because of people like grover norquist, we are not in that position. people that would otherwise vote for an increase in the debt ceiling would do so but they are not in a position to compromise. >> well, yes and no. it comes back to what people fundamentally believe is the problem. and republicans fundamentally believe that this underlying problem is that we've allowed spending to go higher and higher and they don't want to raise taxes to pay for that. they would rather stee shrink down. the democrats, you know, come from a very sincere place of really wanting to provide a stronger social safety net. they want to provide far more services of the country and believe that the rich want to pay more to get there. >> diane swunk, is there any way to reduce our debt, to get into a situation where our deficits are not as big in a meaningful way without raising taxes?

>> well, there's a way to do it. it's whether that is politically acceptable to the american public, the kind of pain that that would induce. i agree with david. the kind of pain that that would induce is not something that we're really ready to swallow. there's a balance in this country between spending and tax cuts and it is more. we do need to cut spending more than raise taxes. >> david gergen, thank you very much. cnn's senior political analyst. diane swunk, thank you. we're going to tell you exactly what would happen if the president and congress do not raise the debt ceiling in time. ♪ hey, dad, you think i could drive? i'll tell you what -- when we stop to fill it up. ♪ ♪

[ son ] you realize, it's gotta run out sometime. [ male announcer ] jetta tdi clean diesel. the turbo that gets 42 miles per gallon. ♪ the turbo that gets 42 miles per gallon. somewhere in america, there's a doctor who can peer into the future. there's a nurse who can access in an instant every patient's past. and because the whole hospital's working together, there's a family who can breathe easy, right now. somewhere in america, we've already answered some of the nation's toughest healthcare questions. and the over 60,000 people of siemens are ready to do it again. siemens. answers. [clucking] [clucking] [ding] [clucking]

announcer: separate raw meats from other foods by using different cutting boards. 3,000 americans will die from food poisoning this year. keep your family safer. check your steps at foodsafety.gov.

[ male announcer ] time to check your air conditioning? come to meineke now and get a free ac system check and a free cooler with paid ac service. meineke. we have the coolest customers. on august 3rd there is a chance that america will wake up without enough cash to pay its bills. that means that our seniors will

not have enough money to and the policy center served as the undersecretary for the president under bush senior. what are the consequences if the debt ceiling is not paid in time? the prevailing wisdom is that bond investors would get paid first. what about everybody else? jay, you and others at the bipartisan center say it would be impossible to keep paying for all of the most popular and important programs in this country that americans rely on and that means possible reducks or delays to social security, to medicare or medicaid, food stamps, checks to federal workers. president obama, in fact, said this week that he could not guarantee social security checks would be mailed out if we don't raise the debt ceiling. now, jay, republicans are calling that a scare tactic. forget the politics. tell me what the numbers say. >> it's not a scare tactic. it's a fact that if the debt

ceiling is not raised by august 2, on august 3 and for the rest of august, the federal government will have approximately half of the cash it needs to pay its noninterest bills and that is really not in dispute. i'm hearing a lot of people saying that is not true anymore. >> on august 3rd, the revenue that will be taken is n is $12 billion, the expenses of $32 billion. the government doesn't work on this basis where it has no money left over from the previous day. would there be enough money on august 3rd? >> yes, there would. but not enough to pay all of those $32 million. what that slide suggests, that's the very first day after the debt ceiling. >> right. >> should have been lifted. what it really suggests is that that social security payment would be at risk of slipping a day or so. that's what it suggests. it's not a prediction and it's -- i think the president's

statement was accurate on its face. >> okay. the next important day, according to some of your research, is on august 15th. tell me what happens then. >> you've got basically a $29 billion and funds. treasury will all make sure that it has enough cash to pay the interest. that will be the highest priority. >> right. >> it won't even be a thought process. that is the highest priority, i believe, having worked there. so you will make sure to have enough cash to pay that. the problem is, it's $39 billion. $41 billion in total costs that day. you don't have anywhere near enough money to make all of the payments. the other thing is, that's the date that the auction closes. so it's a ten-year security that's got to be rolled over that day. you've got to have the ability to pay that. >> that's right. it's $27 billion of new money that buys a ten-year security and that's a challenge.

>> the rising possibility that congress does fail to raise the debt ceiling has resulted in credit rating agencies to review america's sterling aaa credit rating. ben bernanke testified before congress last week and said it doesn't actually matter whether you do some of this juggling that you're talking about. the credit markets will see this as a default one way or the other. if you pay your bond holders but don't pay something else, they will still down grade you. what is the risk that if america gets it together before the august 2nd deadline that we keep our sterling credit rating? >> well, first of all, standard & poor's will actually go ahead and downgrade whether there's a bond default or not. that will have a positive effect. at will mean higher rates and

and moodys has said that they won't downgrade us unless there is a bond default, which we think is unlikely. >> let me ask you, because you've been in the treasury, on august 4th or 5th, if we don't have a debt ceiling increase, who in treasury makes that decision as to what gets paid? >> well, of course there is no playbook here. this is a new thing. theoretically, people in the administration could make decisions and set priorities or maybe not. maybe they will just let the fed pay the bills in the order in which they come due and they may not have the position to do this. >> jay, thank you so much. a visiting scholar with the bipartisan former undersecretary of the treasury. more than 14 million americans are out of work and we need a solution to that problem. is a new stimulus the answer? with all of this debt talk it's not likely. but we're going to discuss it right after this. hey ! chocolate, vanilla or strawberry ? chocolate !

chocolate it is ! yeah, but i'm new, too. umm... he's new... er... than you. even kids know it's wrong to treat new friends better than old friends. at ally bank, we treat all our customers fairly, with no teaser rates and no minimum deposit to open. it's just the right thing to do. is it the new forty, i don't know. i probably feel about thirty. how is it that we don't act our age? [ marcie ] you keep us young. [ kurt ] we were having too much fun we weren't thinking about a will at that time. we have responsibilities to the kids and ourselves. we're the vargos and we created our wills on legalzoom. finally. [ laughter ] [ shapiro ] we created legalzoom to help you take care of the ones you love. go to legalzoom.com today and complete your will in minutes. at legalzoom.com we put the law on your side.

[ male announcer ] if you're looking for a pickup truck, check out the miles per gallon. the length of the power train warranty. and the horsepower. only ram delivers this kind of muscle. that'll thin out the herd real quick. guts. glory. ram. we like to go the extra mile for our clients. with the wassman family, it was 2,500 extra miles. we're the wassman family from skagway, alaska. livin' so far out and not havin' a bank within 90 miles...

i was runnin' into dead ends. happened to come across quicken loans online. [ chris ] walked over to the computer... i was able to see all the paperwork. while i was on the phone, i was able to go through the checklist. [ kathy ] they were quick and efficient. quicken loans is definitely engineered to amaze. they were just really there for us. i don't even know anymore. [ tapping ] well, know this -- for a good deal on car insurance, progressive snapshot uses this to track my good driving habits. the better i drive, the more i save. it's crystal-clear savings and only progressive has it. nice. this has been a public savings announcement. out there with a better way. now, that's progressive.

18 thoirks job 18,000 jobs were added in june. which is way below what we need to see. a lack of jobs is just one reason why federal reserve chairman ben bernanke is warning congress to be careful where she slash spending. >> i only ask or suggest as congress looks at the timing and composition of its changes to the budget that it does take into account that in the very near term that the recovery is still rather fragile and that potential cuts would be damaging to that recovery. >> bob is a distinguished fellow. will cain is a contributor.

bob, you feel that the reduction in government is hurting job creation efforts? >> no question about that. but i actually think that -- and this is going to make it really simple. i think that this is sort of a phony debate. this is a manufactured crisis. we should be dealing with the debt ceiling separate and dealing with budget matters separate. they are very complex and involve more than the idea of whether you're going to raise taxes or cut spending. and i don't think that we're making any progress here. i doubt -- i agree with david gergen. i doubt that the republicans are going to send the economy over a cliff. so i expect the debt ceiling to get raised one way or the other. >> right. >> but the real issues relating to the budget and long-term debt are not going to be dealt with. >> all right. will cain, something that started trickling out there, is the idea of the necessity of more stimulus. we heard how the stimulus is the

reason to some people why we are in this trouble. is there any possibility of more stimulus coming from the government? >> none. zero. and let me tell you why. because i think for a lot of us, the feeling is that we had taken $800 billion, walked into the bathroom, dumped it, and flushed it. that's about how much help it did. it didn't hurt, but it didn't help. president obama himself says it didn't create the jobs that we expected. even paul says that it wasn't created the right way. that's the narrative. it should have been created the right way. >> bob, let's just get your response to what will said. >> first of all, to suggest that the stimulus did not help is just wrong. it did save a significant number of jobs. it probably created some jobs, not even enough in this -- he's right, as the president had hoped for.

but it also gave significant help to the state to just hemorrhage revenue. so we were in a very dire crisis and the stimulus helped prevent it from becoming even worse. i think the stimulus wasn't big enough. i think it wasn't shaped properly. there were too many tax cuts. >> that's right. >> et cetera. >> but beyond that, now, we should take the budget issues and the jobs issue and move it separate from the debt ceiling thing. the only way to really get a handle on long-term deficits is, one, you need to increase some revenues. i think the bush tax cuts for everybody ought to be allowed to lapse. but we need job creation so that you have more people working and paying taxes. but that requires investment. >> okay. >> you begin to create these jobs and address the budget deficit in the medium to long term, not in the immediate term.

>> they think that means just extra spending, just whatever you want to spend on. >> look -- >> how do you create jobs? >> simultaneous agreement or disagreement. we need to separate the economy and the federal government budget and deficit. >> yes. >> those are not necessarily playing together. a lot of conservatives would have you believe that it's impeding the immediate economy. no. it will eventually if you don't get entitlements under control. >> yes. >> now that we get to, how do we fix the economy? we have a philosophical and putting it in the hands on the politicians and government, i don't believe they know what the next big thing is. i believe the spontaneous chaos free markets do. >> we need it to create jobs. >> what's the investment that you think creates those jobs? and frankly, whether it's big companies or small businesses, what is the thing that is going -- >> franklin roosevelt said we ought to approach the job issue the way we would approach the

emergency of a war. i think we have a jobs crisis that is that dire at the moment. i think we ought to be investing in infrastructure and not just roads and buildings. i think we should be building new schools. we should be weatherizing every building in the united states and have a crash program on new forms of energy, clean energy, and that sort of thing so that we are in the forefront of this new industry for the 21st entry. >> obama cannot put together the perfect package. >> you asked what i would do. >> now the problem is we have to go ask nancy pelosi and eric cantor to come together and -- >> eric cantor would take us over an economic cliff. >> and so would nancy pelosi. >> no, she wouldn't. no, she wouldn't. i disagree with that. >> let's say you don't like bob's discussion. we know businesses are sitting on a lot of money. we know we've seen remarkable profitability.

what is stopping them? we keep hearing it's a lack of clarity about what government is going to do. it's obama care. >> there's one more. debt. >> come on. >> debt. >> give them the first two letters right. >> how is that stopping companies from hiring people? >> the commerce department just came out yesterday and said consumer spending is inching along. it's gagging. two-thirds of our economy depends on consumer spending and household debt, yours, mine, bob's, everyone's is at record historical levels. bob thinks the problem is jobs. i think the problem is debt. you'll never have a good employment market until you get rid of debt. >> you can get rid of debt if you have jobs for everyone. >> the big corporations have found that they can make tremendous profits without as many workers. so they've gotten the cost of workers down and they are not going to jack that up much

higher. i think it's amazing that jeff immelt is the president's point man on jobs. jeff learned at the jack school of job creation. give me a break. >> i agree on that. >> i would just assume give the economy for to you handle it. would you come up with a good job situation. good to see you. bob is a senior fellow and former columnist with the "new york times." that phone hacking scandal that brought down one of britain's biggest news scandals, and why it has implications in the future. winning hotel bids to find where you can save up to 60% on hotels. * we'll even email you other people's winning bids, so you'll know what price to name. *á with new hotel bid alerts, from priceline.

[ jim ] i need to push out a software upgrade. build a new app for the sales team in beijing. and convince the c.e.o. his email will find him... wherever he is. i need to see my family while they're still awake. [ male announcer ] with global services from dell, jim can address his company's i.t. needs through custom built applications, cloud solutions and ongoing support in over 100 countries. so his company sees results. and jim sees his family. dell. the power to do more.

well, rupert murdoch's "news of the world" is out of business and some are alleged to have been involved in hacking of the phones of politicians and even murder victims. now comes word that the fbi is looking into whether families of the victims of 9/11 might have had their phones hacked as well. the fbi is responding to angry lawmakers, like rockefeller that issued this statement. hacking against a range of individuals is offensive and journalistic efforts. this raises serious questions about whether the company has

broken u.s. law and i encourage the agencies to investigate to make sure americans have not had their privacy violated. howard is host of reliable sources which airs every monday morning here on cnn and howard, the u.s. audience may not be too familiar with news of the world but could this change their perception of other news corp properties, like fox news, "the wall street journal," the new york post if 9/11 victims and their families are involved in this scandal? >> that certainly would bring the story dramatic to this side of the atlantic. but i want to be cautious because the fbi is conducting a preliminary investigation and it may very well be that "news of the world" was going after 9/11 victims because the tabloid thought it would be a great story but we should make the leap that fox news, there is no evidence of that. >> is it because british tabloid

journalism is so different and not necessarily the kind of thing that would happen in the united states? >> the whole culture is a lot looser and more permissive and questionable than what we have in the united states. "news of the world" beyond the phone hacking thought it was a great idea to have a reporter dress up as a fake shake and do that sting on sarah ferguson. that would not fly in the united states or there would be a lot of criticism. >> does rupert murdoch need to do something to convince u.s. readers and viewers that these kinds of things were just with british and not at fox news? >> murdoch has a lot of damage control work ahead of him. on friday when he accepted the resignation of rebekah brooks, that was a step in the right direction. there is going to be full-page

apologies in the london newspapers. clearly the onous now is on murdoch. it's a huge black eye for his empire and naturally people are going to be suspicious about whether his u.s. media properties indulged in any of the questionable conduct. murdoch has a lot of work to do to prepare the tattered image of his company. >> howard kurtz is the washington bureau chief of the daily beast and newsweek and host of reliable sources here on cnn. deal or no deal? is there a safe haven for your money in all of this debt mess that we're talking about next? coming up next. and the more i focus on everything else, the less time i have to take care of me. that's why i like glucerna shakes. they have slowly digestible carbs to help minimize blood sugar spikes, which can help lower a1c. glucerna products help me keep everything balanced. [ golf clubs clanking ] [ husband ] i'm good! well, almost everything. [ male announcer ] glucerna. delicious shakes and bars.

helping people with diabetes find balance. she is the greatest thing ever. one little smile, one little laugh. honey bunny. [ babbles ] [ laughs ] we would do anything for her. my name is kim bryant and my husband and i made a will on legalzoom. it was really easy to do. [ spits ] [ both laugh ] [ shapiro ] we created legal zoom to help you take care of the ones you love. go to legalzoom.com today and complete your will in minutes. at legalzoom.com we put the law on your side. sure, but let me get a little information first. for broccoli, say one. for toys, say two. toys ! the system can't process your response at this time. what ? please call back between 8 and 5 central standard time. he's in control. goodbye. even kids know it's wrong to give someone the run around. at ally bank you never have to deal with an endless automated system. you can talk to a real person 24/7.

it's just the right thing to do.

man on tv: ...rbis and 36 homers. swings at the first pitch and fouls it deep back into the stands. [ding] [fans whirring] announcer: chill raw and prepared foods promptly. one in 6 americans will get sick from food poisoning this year. check your steps at foodsafety.gov. if you're struggling to understand how a default would affect your 529 and other investments in stocks and bonds, you are not alone. there are plenty of doomsday scenarios out there and one of the reasons for concern is that asset prices are based on what's called the risk free rate of return. that's the rate of return of u.s. treasuries which are generally assumed to be risk

free. a default would signal for the first time ever that treasuries are not free of risk and it would trigger a repricing of many financial assets. so how do you protect yourself from that? jim awad from zefer management is back with us. he's a great friend of ours. jim, this is not to presume -- i don't want to put words in your mouth and tell people they should be worried about what's going to happen. but people are worried. >> it is a possible very negative event. now, what i always tell people is don't panic and change your basic portfolio structure based on short term or unpredictable events. but the u.s. might default. greece might default. there's a lot going on. what i would say in this environment what people should do is reduce their risk profile. not change their strategic long-term allocation, but on the margin. reduce their risk profile, for instance, by lightening up on junk bonds, lightening up on small cap stocks, lightening up

on commodities. things that might be affected. >> we're probably talking a week again and things might be more serious in which case my first advice to people has been find out how to log into your 401(k). or 529 to know what to do. but when you say lighten up, do what with it, just hold the money in cash? buy gold? >> we're talking about maybe 10% to 15% of your portfolio and i would put money in gold because gold goes up whenever there is confusion and chaos and you have debasement of currencies. people are going to rush into gold as a safe haven. also if the u.s. treasury were to default, people would want to go into corporate bonds. the barclays intermediate term credit trust is a portfolio, etf that invests with a 5-year ma dhurty, 3% yield, great credits, jp morgan, goldman sachs. you want to go from u.s. frshry debt because if they default people are going to run to the certainty of strong corporate debt. >> in fairness, that hasn't

given much of a return. you're just talking about safety. if you go into this barclays, that's safe. >> that's safe. if treasuries go down and interest rates go up, people are going to want to own corporate bonds instead of treasury bonds. but what you want is you want high quality corporates and you didn't want to go too long term because who knows what inflation is going to be in ten years? so this is a five year high quality -- >> you say high quality because that's what the government bonds are right now. you said gold. i mentioned this to somebody the other day. he said gold is just too expensive to buy. you're recommending the etf for gold, gld, which by the way is up 30% over the course of a year. but an etf is easy to buy and sell. >> and gold is still not adjusts for inflation. it's lower than it was in 1980. if you see the money being printed people aren't going to want to own only dollars and euros. if you're a chinese who just came into a lot of money, an

indian middle class you're going to want some of your money in a store of values. currencies are being debased by all the debt. >> thanks very much, jim. advice on how you can start to protect yourself no matter out debt ceiling negotiations shake out. one thing is certain, americans are going to have to learn to accept the new reality that they face in the future. i'll explain next.

somewhere in america, a city comes to life. it moves effortlessly, breathes easily. it flows with clean water. it makes its skyline greener and its population healthier. all to become the kind of city people want to live and work in. somewhere in america, we've already answered some of the nation's toughest questions. and the over sixty thousand people of siemens are ready to do it again.

siemens. answers. no, it's just for new people. hey ! chocolate, vanilla or strawberry ? chocolate ! chocolate it is ! yeah, but i'm new, too. umm... he's new... er... than you. even kids know it's wrong to treat new friends better than old friends. at ally bank, we treat all our customers fairly, with no teaser rates and no minimum deposit to open. it's just the right thing to do. oh, we call it the bundler. let's say you need home and auto insurance. you give us your information once, online... [ whirring and beeping ] [ ding! ] and we give you a discount on both. sort of like two in one. how did you guys think of that? it just came to us. what? bundling and saving made easy. now, that's progressive.

call or click today. time for the xyz. it has become fashionable and to a great degree justified to be frustrated with congress about the snail's pace at which debt ceiling negotiations are moving. this republican congress and the democratic controlled congress that preceded it have shown a singular and remarkable inability to perform some of the most basic tasks with which they are entrusted. namely making and passing a sustainable budget one time and raising the debt ceiling. neither of these matters are options. on friday, i spoke with presidential candidate tim pawlenty and asked him about the fact that both a gallup poll and quinnipiac poll show that most americans and even most republicans would support a compromise that involves not just budget cuts, but also tax increases. or if it's more palatable for you to hear it this way, the

closing of certain loopholes and elimination of certain credits for businesses and high earners. pawlenty's response was you can't govern by polls. i agree. greek enacted legislation that clearly went against the will to people. so my open letter is to you. dear america, the solution will be painful. some spending cuts are necessary and everything needs to be discussed. programs like medicare do need to be retooled. there can be no sacred cows. and, yes, millionaires and billionaires and big business, you need to pay your share. tax increases or whatever you are more comfortable calling them do have to be part of the solution. there is simply no way to make the math work without them. not everyone is going to be happy with the outcome. it's possible that no one will be happy with the outcome because we'll all give something up. but the sacrifice you refuse to make today will only require more painful ones not just for your children, not just for your grandchildren, but for you. this is going to start hurting in the foreseeable future. i'm asking you to give your

elected officials the freedom to do what is best for the country even if it is not ideal for you. there's a selfishness that is dominating this conversation. it's all about politicians doing what their constituents want. what happened to doing the best for the country? let your elected officials do their jobs without fear that if they don't pander to you, they won't get re-elected. and honestly, enough of making candidates sign these all or nothing pledges about not increasing taxes. your threats to unseat politicians who try to do the right thing actually limits their ability to do the right thing. living within our means will not be easy, it may mean working a few more years than you plan to with fewer benefits than the prior generation had, but hard work and sacrifice are american attributes and it's time for all of us not just the politicians to rise to the challenge. that's my xyz. thanks for joining the conversation on "your $$$$$." we're here every saturday and sunday at 3:00 p.m. catch me every morning at 5:00